Sourcing of China’s Paper Fiber Supply & Recent Trade Trends Kerstin Canby

1. Sourcing of China’s Paper Fiber Supply & Recent Trade Trends Kerstin Canby

2. Finland USA Austria Sweden Belgium Canada Denmark Netherlands Germany New Zealand Australia UK Japan 1980-2000 Italy France Singapore Rep. of Korea Spain Portugal Ireland Greece Malaysia South Africa Mexico China Argentina Brazil Turkey Venezuela Russia India Where will the supply come from? GDP per capita & paper consumption USA UK China

3. China’s Total Papermaking Fiber Resources

4. Resource Origin Fiber Input Type Processing Final Product Agricultural residues Vegetable pulps (short fiber, low strength, poor quality Traditional small-scale pulp & paper mills Packaging & other paper products for domestic use 53% Local pulp & wastepaper 53% Wastepaper Office paper Bleached chemical wastepaper white paper liner cardboard corrugating core Large scale modern paper industry Export-grade corrugated shipping boxes 22% Used cardboard & cartons Unbleached draft wastepaper Imported secondary fiber 33% Mixed (cardboard, news, magazines) Other wastepaper (mixed) Coated mechanical grades (newsprint) xxxxxxx11% Used magazines, newspapers, etc Mechanical grade wastepaper Imported pulp 13% Low risk forest / plantations Chemi-mechanical pulp Export-grade printing and communication paper 14% Potentially threatened forests Bleached kraft pulp (sulfate) Low risk forest / plantations Hardwood pulpwood Imported pulpwood 1% Unknown forest / plantations

5. Resource Origin Fiber Input Type Processing Final Product Agricultural residues Vegetable pulps (short fiber, low strength, poor quality Traditional small-scale pulp & paper mills Packaging & other paper products for domestic use 53% Local pulp & wastepaper 53% Wastepaper Office paper Bleached chemical wastepaper white paper liner cardboard corrugating core Large scale modern paper industry Export-grade corrugated shipping boxes 22% Used cardboard & cartons Unbleached draft wastepaper Imported secondary fiber 33% Mixed (cardboard, news, magazines) Other wastepaper (mixed) Coated mechanical grades (newsprint) xxxxxxx11% Used magazines, newspapers, etc Mechanical grade wastepaper Imported pulp 13% Low risk forest / plantations Chemi-mechanical pulp Export-grade printing and communication paper 14% Potentially threatened forests Bleached kraft pulp (sulfate) Low risk forest / plantations Hardwood pulpwood Imported pulpwood 1% Unknown forest / plantations

6. Why is imported chemi- mechanical pulp considered low risk?

7. Why is imported bleached kraft pulp considered higher-risk?

8. Resource Origin Fiber Input Type Processing Final Product Agricultural residues Vegetable pulps (short fiber, low strength, poor quality Traditional small-scale pulp & paper mills Packaging & other paper products for domestic use 53% Local pulp & wastepaper 53% Wastepaper Office paper Bleached chemical wastepaper white paper liner cardboard corrugating core Large scale modern paper industry Export-grade corrugated shipping boxes 22% Used cardboard & cartons Unbleached draft wastepaper Imported secondary fiber 33% Mixed (cardboard, news, magazines) Other wastepaper (mixed) Coated mechanical grades (newsprint) xxxxxxx11% Used magazines, newspapers, etc Mechanical grade wastepaper Imported pulp 13% Low risk forest / plantations Chemi-mechanical pulp Export-grade printing and communication paper 14% Potentially threatened forests Bleached kraft pulp (sulfate) Low risk forest / plantations Hardwood pulpwood Imported pulpwood 1% Unknown forest / plantations

9. Why is imported pulpwood considered higher risk?

10. Resource Origin Fiber Input Type Processing Final Product Agricultural residues Vegetable pulps (short fiber, low strength, poor quality Traditional small-scale pulp & paper mills Packaging & other paper products for domestic use 53% Local pulp & wastepaper 53% Wastepaper Office paper Bleached chemical wastepaper white paper liner cardboard corrugating core Large scale modern paper industry Export-grade corrugated shipping boxes 22% Used cardboard & cartons Unbleached draft wastepaper Imported secondary fiber 33% Mixed (cardboard, news, magazines) Other wastepaper (mixed) Coated mechanical grades (newsprint) xxxxxxx11% Used magazines, newspapers, etc Mechanical grade wastepaper Imported pulp 13% Low risk forest / plantations Chemi-mechanical pulp Export-grade printing and communication paper 14% 63.5% Potentially threatened forests Bleached kraft pulp (sulfate) Low risk forest / plantations Hardwood pulpwood Imported pulpwood 1% 80% Unknown forest / plantations

11. 2007 trends continue….

12. 2007 pulp sourcing

13. Wood chips small but important to some countries...

14. Recommendations • Be aware of where pulp, pulpwood and woodchips are coming from & develop tracking systems to verify origin • Address the “weakest links” in China’s fiber supply system: the uncertified pulp and pulpwood coming from Russia and Indonesia • ensure certified harvested from sustainably managed forest operations & can be tracked through to the mill

15. 2007 import rise

16. Taking out p & p, logs dominate

17. Russian logs dominate….

18. Small increase in other Russian wood products… Russian Exports to China, w/o logs

19. Rise of PNG, Solomons, NZ, Gabon

20. Indonesian imports down

21. African imports up (but only 4-5% of total imports)

22. Where is it going?

23. Where is it going?

24. Where is it going?

25. Exports to the United States Exports to US by Product Exports by Destination 2007

26. Furniture & plywood Exports to US 1st Q 2008 Jan-Apr 2008 Plywood and Furnitur Exports by Destination 2007

27. Importance of Middle East Exports by Destination 2007